Relation Between Daytraders and Time

[ptcman 10]

Hello.

 

I'd like to know which type of relation you guys, daytraders, have with time.

 

Do you consider time more important than price when daytrading?

 

Usually, we say that we trade prices, not time, so time is secondary when compared with price, but let's stop for a moment and think about this.

 

Daytrading, as the name specifies, deals with trades taken only for that day, so like it or not, we are assuming right at the beginning of that trade a stop loss based on time, that is, we must close the position by the end of that trading day.

 

So, aren't we, based on what was said above, put the time factor in front of price? No matter where prices might be, above or below of our entry point, we will close the position by the end of the session.

 

But lets see this by another perspective, lets say we've just open a long position and at the same time we put a stop loss 3 points below of the entry, and at the same time, we also say that if in the next 30 minutes prices haven't broken a certain price, we close that same long position.

 

Again, we continue to put time in front of prices.

 

What about news?

Have you noticed how things really slow down near a news release and explodes right after the release?

Some traders wait for the news to be released to act on it, others prefer to anticipate and others just seat aside and watch what happen.

 

Again, we continue to put time in front of prices.

 

This is what we can typically read on a book related to technical analysis.

What I'd like to know though, is the opinion of you, real daytraders.

 

Best regards,

ptcman

[Kiwi 16]

No.

 

What you suggest might be true if my trades took a significant portion of the day which they don't.

 

For index futures they might only be a few minutes. For forex they might take longer but the day doesn't end until the weekend so can be largely ignored.

[steve46 12]

Time & Price are equivalent. If you know how to use time, you gain an edge over participants who only use price and vice versa.

 

As I have already stated in previous posts, there are a number of participants who transact based on "targets". These targets must be hit within the space of specific time periods, if not then those people lose money....as we move through time, the importance of each period becomes apparent (to those who pay attention).

 

There are a number of ways to use time in financial markets. On the simplest level, retail particpants are famous for entering trades "late", while most professionals try to get in "early"

While that is clearly an oversimplification of things, it illustrates a basic tenent, that retail is usually 180 degrees out of sync with what really works in markets and a significant reason for that is the lack of understanding of the significance of time.

[ptcman 10]

While that is clearly an oversimplification of things, it illustrates a basic tenent, that retail is usually 180 degrees out of sync with what really works in markets and a significant reason for that is the lack of understanding of the significance of time.

 

Yes, that is one of those truths that are undeniable, but than the one million dollar question is, what is the true significance of time?

 

Are you saying that there is a true pattern in the markets that the retail traders just can't figure out? That all of that talk that says that we make our own market perception is BS?

[ptcman 10]

For index futures they might only be a few minutes. For forex they might take longer but the day doesn't end until the weekend so can be largely ignored.

 

But can't those trades that might be taken for just a couple of minutes, be related to time?

 

For example, every time you take a position, your system/strategy says that your maximum gain is during the first 5 minutes of that trade.

Won't you, maybe on a implicit way, take that in consideration and act on it?

[steve46 12]

Yes, that is one of those truths that are undeniable, but than the one million dollar question is, what is the true significance of time?

 

Are you saying that there is a true pattern in the markets that the retail traders just can't figure out? That all of that talk that says that we make our own market perception is BS?

 

No, I'm not say that at all. Read my posts. Its simple and straight forward. There are yearly, quarterly, monthly and weekly "opens"....those are pivots and (some) institutional traders will try to defend them, and to exceed those pivots in order to obtain a bonus at the end of the year...I show a simple example in my thread "An Institutional look at the S&P Market".

 

Its a fact that we all have our own perception, however you have the option of adapting to new data. I suggest you think about how you might adapt yours to this data..

 

The significance of time is also very straight forward. As an institutional trader I have a limited amount of time to get my business done. As time runs out I have to make decisions in order to reach my goals. Its very simple.

 

Good luck

Edited December 5, 2010 by steve46

[steve46 12]

But can't those trades that might be taken for just a couple of minutes, be related to time?

 

For example, every time you take a position, your system/strategy says that your maximum gain is during the first 5 minutes of that trade.

Won't you, maybe on a implicit way, take that in consideration and act on it?

 

I have no such concern when I transact in the markets and like most of my colleagues I never take a postion based on short term considerations. It seems to me that you need to broaden your education. There are many participants in the financial markets, each with their own agendas and time frames....I suggest you take the time to learn more about this before putting money at risk. One resource that you may want to investigate is Auction Market Theory.

 

Good luck

[Kiwi 16]

But can't those trades that might be taken for just a couple of minutes, be related to time?

 

For example, every time you take a position, your system/strategy says that your maximum gain is during the first 5 minutes of that trade.

Won't you, maybe on a implicit way, take that in consideration and act on it?

 

I explicitly do not take time into consideration. If I did I might well be shaken out of a trade that moves, coils for a bit while further accumulation occurs and then moves again. If the price action doesn't say that the conditions have changed I wait for the originally planned conditions to occur before exiting. Patience is a virtue.

[SIUYA 11]

I explicitly do not take time into consideration. If I did I might well be shaken out of a trade that moves, coils for a bit while further accumulation occurs and then moves again. If the price action doesn't say that the conditions have changed I wait for the originally planned conditions to occur before exiting. Patience is a virtue.

 

I agree with Kiwi.

For me time is not really a consideration, except maybe to say I have found better trades with which to deploy my resources and hence I will cut the trades that are just sitting still.

The only real thing I worry about with time is in relation to - when I trade something and I anticipate it will do something, I usually wish it to do it asap. If not I might get worried.

Now this only applies to the short term trades. The longer term trades, or those trades based on a different persepctive, may require a little more leeway.

One thing I have recently stopped looking at is 5min, 10 min charts. I just follow range bars for short term, and daily for swing trading. So far it does not make a difference to me.

[robertm 10]

Time is key in how we view price unless you are trading only the order flow/book.

 

Time is what forms our view of S/R levels. Read any book on FX written by somebody who trades multiple timeframes and you will notice they are doing this in order to

- Fiddle with volatility

- Manipulate trend/S&R

- Manipulate price into making their indicator trigger them into a trade or give them an "acceptable" trend to fiddle with their Fib/EW etc to conjure up stop/targets.

 

If you trade order flow only (i don't), then you are simply identifying s/r areas by the grouping of orders, without a direct relationship to time (other than your perception on your trade window, or the effect of time in creating a market OHCL).

 

There are all sorts of studies on time of day measured by volatility, size of market moves, liquidity/volume, etc. How you interpret these (which varies depending on what you are trying to do vs what the author was trying to do) will impact your trading.

 

For example :

One person states "Trade near the news, it moves the market, it's great" - they are a scalper, or "closet scalper".

 

Another states "Trade the wave, let it push your trade to profit/loss" - they are position trading (in my view of the term).

 

Another states "Macro trend doesn't matter as we trade intraday" - Scalper, yes, Position trader, no.

 

As you reduce time you also effect the bias direction price will show in relation to overall trends.

 

I could go on, Noise, Volatility, Psychological/Execution issues, etc. But you get the drift (I hope).

 

If you really want to do your nut in consider that a 144 (or whatever you use) tick chart has 144 possible combinations of OHCL, so the smaller your view of time, the less relevant what you consider the OHCL and S/R areas to be to those in the broader market.

[ptcman 10]

First of all let me thank you all for your insight.

 

If you really want to do your nut in consider that a 144 (or whatever you use) tick chart has 144 possible combinations of OHCL, so the smaller your view of time, the less relevant what you consider the OHCL and S/R areas to be to those in the broader market.

 

I confess that I never had consider that.

 

You guys really know how to open our minds.

 

Thank you